Hi! I just did an āextensiveā analysis of harmonic patterns, using an automatic method that detects the patterns, and simulate I have traded them. So far, the best one is Butterfly, with near 80% success, followed by Crab and Gartley with about 70% success. I found that Bats are not very good, but I need to say that my code did not check the AB=CD condition, so the patterns could have a better success rate.
I did the tests since January 1st 2012 to-date. I use an automatic stop loss and take profits. The stop loss was placed outside the PRZ plus 1ATR, calculating the PRZ with the extreme fibonacci levels for each pattern. I named them PRZi (start) and PRZf (PRZ end). This is showed on my charts as a filled rectangle in the PRZ zone. The Stop loss is then placed 1ATR(20) after the PRZf.
The Take Profit is tested in 2 parts, the first one is on the 38.2%CD and the second in 78.6%CD. After the 38.2%CD is reached, I move the stops to Break even (0%CD), so I get a free trade.
This is the method I used to test the pattern efficacy.
For butterfly, using High and Lows for fibonacci, I got 18.6% of time the 38.2%CD is reached, then the price retraced to SL, 60.2% the price reached 78.6%, 13.4% the price went directly to the SL, and only 7.6% the price touched the 23.6%CD and then retraced to SL. This shows that 18.6%+60.2% of time the pattern is successful, and 13.4%+7.6% of time, the pattern generated a loss. That is a 78.8% of time the pattern wins, this without checking the AB=CD, nor candlesticks or another way of confirmation, only checking the fibonacci ratios.
This confirms that harmonic trading is profitable system indeed, but when I do live testing I get a pretty bad results, so I was thinking that the backtesting have a difference with live testing: in back testing I know when the candle that formed the pattern is closed, and know the high/low of that candle, in live testing I donāt. So I was wondering what happens if I better enter the trade once the candle that forms in D point finishes, this way is almost the same way that the back test program did, with the difference that the entry price on back test is better than in live test.
[B]The question here is, do you enter a trade with harmonic patterns, once the pattern is finished? or do you place the trades as limit orders on the PRZ area setting SL and TP levels, and forget about it?
I know you also check the behavior of candlesticks on the PRZ, but suppose that the candlestick pattern is OK, like tweezer, morning/evening star, or pinbars, do you enter the trade once the candle finishes forming the harmonic pattern and the candle pattern or just enter the trade when the candle is inside the PRZ with the right fibonacci ratios?
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Thanks 
Oh, I forgot to say that for butterfly I got 1124 samples, for crab 1054, for gartley 1833 in 14 pairs with spread of 5 pips or less
